China’s Shuanghui International was granted national-security clearance to take over Smithfield Foods, Inc., the world’s largest pork producer. This clears another hurdle for the $4.8 billion deal, which would be the largest acquisition of a U.S. company ever by a Chinese buyer.
The U.S. Committee on Foreign Investment (CFIUS) granted the approval to the transaction between Shuanghui International Holdings and Smithfield Foods. This decision is a concern for some consumer groups and the National Farmers Union. President Roger Johnson said the deal represents the sale of one-quarter of U.S. hog processing to a quasi-state owned Chinese enterprise which sets a dangerous precedent in terms of food security and market competition.
Johnson says NFU urges Congress, the Administration and other decision makers to oppose this sale and that NFU believes foreign-backed control will only make the situation worse. Assistant Secretary for International Markets and Development Marisa Lago said CFIUS has only one purpose — to review the potential national security effects of transactions through which a foreign investor could obtain control of a U.S. business. Lago said CFIUS does not consider broader economic or policy concerns when reviewing foreign investments. The committee applyies the same rules to each transaction it reviews regardless of the nationality of the investor or economic sector of the investment.
Shareholder approval is still needed. Smithfield’s shareholders are scheduled to vote on the sale at a special meeting on September 24th.
Some lawmakers have expressed concerns the deal could jeopardize U.S. food safety and raise pork prices for American consumers. In June they requested the Committee on Foreign Investment in the U.S. to include USDA and the Food and Drug Administration in their deliberations. Senate Ag Committee Chair Debbie Stabenow also questioned if this would encourage China to purchase other U.S. food companies.
During a Committee hearing she called it important to evaluate how foreign purchases of our food supply will affect our economy. She expressed the belief that economic security is part of our national security and should be considered when foreign investment into the U.S. is reviewed. Stabenow said the Senate Agriculture Committee will continue examining the effectiveness of the review process for acquisitions such as this and take steps as needed to protect American interests in future transactions.